Need advice - first property, inherited tenants early

[Ida Powers]

Hi All - 

We purchased our first property at the end of October (yay!). Its a duplex with 3 bed/1 bath and 2 bed/1 bath. We inherited tenants on the 3 bedroom side and they have been haggling us to lower to the price just about every weekend as were working on the reno on the 2 bed side. I did offer to lower the price for them by $200 for a couple months because we really didn't want to have vacancies on both sides at the same time but they still said the place was too big and its too much money. There is also a language barrier so its difficult to communicate with him. Anyway, we told him we could not accept any lower so he wants to move out.  He will be moving out 3 months early. I am trying to figure out if we are required to pay him back for his secuirty deposit.  Also, the 3 bed side will need some work before re-renting so we won't be able to turn it around right away. 

The lease says this "Security deposit: Lessee has deposited with lessor the sum of ($$ one month rent) as security for the full and complete performance of the duties and obligations imposed upon Lessee by law and by the terms and provisions of this lease. Lessor retains the right to use the deposit for construction or other purposes and Lessee acknowledges that such deposit shall not be subject to any escrow, trust or security agreement. In the event of a default by Lessee in such performance, Lessor may apply such portions of such deposit which are not applied by Lessor or necessary to be so applied in order to compensate Lessor for damages sustained as herein provided shall be returned by Lessor to Lessee within thirty (30) days from the expiration of the term of this leave or extension thereof, provided Lessee has given Lessor in writing a new or forwarding address. In no case can Lessee use Security Deposit for the last months rent."

Also under "Default" it says "If damages, charges and any unpaid rent exceed the Security Deposit, Lessee agrees to pay said amount"

Any advice would be appreciated for this newbie! 

[Anthony Wick]

@Ida Powers  First, you cannot charge them for damages if there is no documentation on what the condition of the unit was at move-in. It's a price we all pay for inherited tenants. When I inherit tenants, I do a new walk though. Everybody gets a new start on the day I close on the property. Unless, of course, that you have a signed move in checklist from the previous owner. 

Now, as far as the lease and payment is concerned. It only matters what the lease says. 3 months to go, they are responsible for the payments until such time you find a new tenant. Iowa law states landlords must attempt to mitigate damages. And that is also the best route to go. Attempt to rerent right away. At the same rent. But if you cannot, they are responsible. 

Here is what I would do: 

1. Notify them in writing what the lease states, and that you intend to follow the lease. All official communication now needs to be in writing. 
2. Get a forwarding address from them asap. Tell them it will be needed to send them their damage deposit. But what you are really doing is getting an address to have them served for small claims court if they do not pay. 
3. Attempt to find a new tenant asap. Ask the tenants to cooperate on this, letting them know it is the best way for them to not incur future rent charges. 
4. Keep their damage deposit for legitimate damage or lost rent you can prove. Return the rest (hopefully all of it). 
5. Be prepared to file a small claims court case immediately if you do not find a new tenant and they do not pay the rent. 
6. Do not fill the vacancy with anybody that does not meet your criteria. But do make every reasonable effort you would otherwise make on a vacant unit.